Negative Equity? Who gives a damn?

You’d have to laugh. The ESRI forecasts that we are slipping into recession and all hell breaks loose. The radio is hopping with experts expounding their theories. The phone-in contributors are agog. Everywhere in the media, people are fearfully stirring up memories of the 1980s. It’s armageddon time.

You’d think that people knew what it meant – recession – but all of the evidence is that they don’t have a clue. For example: the Greens used to say that growth was a problem, that we were addicted to it and that this was one of the reasons why the planet was going to hell in a handcart. On that reading, ‘negative growth’, as the euphemism has it, would have to be an improvement. Odd. I didn’t see any of them celebrating last week. Or even saying: ‘Hold on, folks, you know this might just be a good thing’.
So let’s be clear: it’s not the end of the world as we know it. A year of in which there is a marginal decline in Ireland’s Gross Domestic Product can easily be followed by one in which there is a return to growth if that’s what we’re after. So fuck all of the doomsday scenarios that are being painted by the economic gurus and the pundits alike. It’s a bit like Johnny Giles says about football: just keep playing the game the right way and you’ll get the results. And the right way is not for banks to screw people...
While you ponder that, here’s a few observations. A lot of people have been ochón-ing about the fact that there has been a drop in the value of houses. By this stage, we’re all familiar with the phrase ‘negative equity’: it means that the borrowings on your house are greater than the value currently ascribed to it by the market. Well, I’m with Vincent Browne on this one. So what? If you have a house you have a roof over your head. There’s an awful lot of people who are less fortunate. As long as you can pay your mortgage, and the bailiff isn’t coming around with a shotgun, then you’re basically OK. The import of this is being stupidly magnified by people who revel in pontificating, especially where bad news is involved. The truth is that there is no point in agonising over something that matters only on paper. Really, who gives a fuck? Get a life.
A different tack: you know, it is true that we had lost the run of ourselves. There we were looking down our noses at the stags and the hens and the Spanish students and all those other classes of visitors that we all of a sudden decided weren’t good enough for us. Now I don’t have any time for the barmy rituals that precede marriage; indeed I’m not exactly a major advocate of the institution itself. But I do think that things had come to a quare pass here, when we were trying to figure out ways of discouraging people from coming to Ireland or banning them or turning them away at our airports or arresting them if they actually got in and we found them wandering out into the street with a drink in their hands. That’s verboten! Off down to the Bridewell with you! Well, don’t be too surprised if you see the signs going up over the next wee while: come back stags and hens, all is forgiven. Spanish students, we need – I mean we love – you! And while we’re on the subject: let’s ditch this ridiculous drift towards shorter opening hours. Bollox to all of the neo-puritanical stuff we’re being force-fed. Let’s welcome the party people here: they’re much more fun than the stiff necks and the stuffed shirts!
And another. It is thoroughly outrageous that ordinary citizens all over the world are currently being forced to pay for the fecklessness of banks and lending institutions. There is a confluence of events behind the current panic in international markets, including the increase in the price of oil (widely exaggerated, incidentally, since the weakness of the dollar isn’t being factored in when comparisons are being made between the dollarprice now and a year or two ago); the mobility of international capital and the resultant uncertainty about jobs; political instability; environmental concerns – and so on. But the biggest immediate factor by far is the fact that US banks collectively engaged in an exercise in short term profiteering, offering 100% loans to people who – if there was the slightest flutter in the market – didn’t have the long term wherewithal to make the required repayments.
Be under no illusion. Everyone who is a customer of a bank is now being forced to pay for the losses sustained by lending institutions during the sub-prime fiasco. They are dressing up the credit squeeze as prudent fiscal policy. In fact they are taking the money off you, and others like you, in increased interest rates, in a bid to claw back as much of what they lost as they can get away with, while also refusing to lend where anything has the faintest whiff of risk about it. That’s the system. In the end, if they are allowed to operate effectively untrammeled, banks will always win.
In this respect, it is within the scope of government to at least do a bit of arm twisting. At the moment banks are the ones doing the squeezing. If anything is designed to trigger what is really of concern – i.e. a return to widespread unemployment – it is this. If banks deny businesses – and I’m talking about ordinary businesses, run by ordinary people – the money to operate, there is nowhere for them to turn and the only option left is to slash or burn. Banks need to be given the word – in terms that brook no misunderstanding – that they are expected to go with the flow, to work with businesses, and with private individuals, rather than withdrawing or withholding credit.
Of course we can’t go mad and bankrupt ourselves by borrowing insanely. Smart moves are necessary. But employment is the real issue. Most people reading Hot Press want to have a place to go to work every day. They don’t want to get the call that tells them that their P45 is waiting for them to collect. Or if they’re students they want to believe that there will be work for them when they finish college. That’s what our economic policy should be focussed on. Maintaining jobs. Increasing the numbers in work. And, the excesses of the harbingers of doom notwithstanding, that is an attainable goal. None of the other stuff matters a shit.